Ecuador is a country in South America whose name translates to “Equator”, which runs along it. It is bordered by Peru, Colombia, and the Pacific Ocean, and also contains the Galápagos Islands in the Pacific. Ecuador is considered a middle-income and developing country with an incredibly diverse landscape.
The minimum wage in Ecuador is currently USD 425 per month, with a workweek of 40 hours per week at 8 hours per day. Any work done past these hours is paid as overtime with a maximum of 4 hours per day or 12 hours per week. Overtime hours are paid at either 150% or 200% of the regular salary.
Pregnant employees are entitled to 12 weeks of paid maternity leave, which the employer covers 25% of the wages while while social security covers the rest. Fathers are also granted 10 days of paid paternity leave, which can increase in the case of difficult deliveries.
Employees in Ecuador are entitled to paid sick leave for up to 2 months, which is covered partially by the employer and partially by Social Security. After 4 days the salary payment becomes a partial salary.
There are 14 public holidays in Ecuador, and employees are entitled to 15 days of paid time off each year. Employees can also receive hospitalization leave, adoption leave, and bereavement leave.
Employment contracts can be terminated with cause such as dishonesty, fraud, negligence, or other work-related offenses. At-will termination is possible in Ecuador outside the probation period but includes higher severance payment.
There is no notice period required by law, but most employers stipulate a notice period in their employment contracts.
Employees who do not receive the appropriate notice or are terminate at-will are entitled to a severance package that is calculated as 1 month of salary for each year the worker has been at the company, up to 25 years.
Ecuador has mandatory 13th and 14th month salary bonuses. The 13th month salary is equivalent to one month of wages paid around December 22nd each year. Ecuador’s 14th month salary is equal to the national minimum wage for one month ($425 for 2022), and is paid usually in March or August depending on the company.
★ 12.15% - Social Security
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Unlike full-time employees, contractors work on projects with multiple companies at a given time and are technically self-employed. Full-time employees are solely focused on their employer and usually receive benefits (such as health insurance, equity or stock options, and time off) as an additional form of compensation. While it can be cheaper to work with international contractors instead of paying benefits to a full-time employee, you run the risk of misclassification. It's recommended to work with an EOR for contractor onboarding and payments, so you can know that your international contractors are paid compliantly and on time.
